Torpedoed: Pork politics and the undoing of an Obama nominee

UVA Law professor Jon Cannon had served in the EPA under Presidents Ronald Reagan, George H.W. Bush, and Bill Clinton.PHOTO COURTESY OF THE UVA SCHOOL OF LAW

The sudden withdrawal of would-be Obama Administration member Jon Cannon, a UVA law professor and Albemarle Planning Commissioner, has left colleagues stunned and left the Environmental Protection Agency without the services of a "straight arrow" in its #2 spot. How did it happen that mere weeks after President Obama had heralded him as a "distinguished American," Cannon withdrew, citing "scrutiny" from the EPA Inspector General.

It turns out the scrutiny wasn't on Cannon per se, but on a foundation on whose board he had served as a volunteer and which, coincidentally, was chaired by another prominent Central Virginian.

Cannon's sudden exit has reignited a debate about whether the best and brightest public servants get unfairly sabotaged by the misdeeds of others–- and what it means for the rest of us, the public they aim to serve.

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When Cannon announced in January that he was leaving his post as Albemarle Planning Commissioner and needed to take a leave of absence from UVA to accept President Obama's nod to join the transition team and eventually the Environmental Protection Agency, few doubted his credentials. Republican President Ronald Reagan first put Cannon in the EPA, and he earned a promotion from Democrat Bill Clinton in 1995 as general counsel, a position Cannon kept for three years before accepting his teaching post at UVA.

To be nominated to a position in the federal government by the new president, a candidate must open up his entire life to examination. To even get a foot in the door, applicants to Team Obama had to fill out a seven-page questionnaire disclosing everything from every carpenter or nanny ever hired, to every diary they ever kept, to any e-mail or text message that could be "a potential source of embarrassment."

Cannon had submitted himself to such vetting, and made it through the process to become President Obama's nominee to become Deputy Administrator of the Environmental Protection Agency. On February 23, the date the nomination was officially announced, Cannon sounded ready to begin the task at hand.

"This is a moment in history for the environment, as well as for the country more broadly," said Cannon in a statement released through the Law School, "and I am excited by the chance to be a part of it."

So it came as a surprise on Wednesday, March 25, when Cannon–- who had already begun spending time in the nation's capitol as a member of the Obama transition team–- abruptly bailed out because the confirmation process might become, as he put it, a "distraction."

"It has come to my attention," Cannon said in a prepared statement, "that America's Clean Water Foundation, where I once served on the board of directors, has become the subject of scrutiny."

Former UVA Law School dean John Jeffries, the man who brought Cannon to Charlottesville to teach in 1998, was floored.

"Jon Cannon is the straightest straight arrow I know," says Jeffries. "That there would even be the suggestion of an ethical problem with him is shocking."

The scrutiny of which Cannon spoke began four years ago when then D.C.-based Foundation director/president Roberta "Robbi" Savage notified law enforcement officials that her office manager had allegedly embezzled more than $300,000 from the Foundation and its sister trade organization, the Association of State and Interstate Water Pollution Control Administrators.

"As soon as we discovered this," says Savage, who was also executive director of the Administrators Association, "I went straight to not only the EPA, but the D.C. police and the FBI."

According to Savage, the crime was a scheme that fooled Savage and everyone else who had examined the Foundation's books.

"She was doing online transfers," says Savage, "and created fraudulent banking statements that we didn't catch until 2005. The EPA did two audits in 2001 and 2003, and they didn't catch them, and when the FBI came in and looked at our situation, they told us they wouldn't have caught them either."

The unraveling of the purported scheme, allegedly begun in 2001, came only with the 2005 death of the alleged perpetrator, Dianna Williams.

After Savage notified the EPA of Williams' alleged wrongdoing, the EPA began performing an audit. According to the EPA inspector general's 2007 final audit report, the Foundation's internal controls and financial records were a mess. The report alleged duplicate transactions, incorrect labor charges, and un-allowable expenses.

"Ms. Williams shredded and destroyed financial records and intentionally misled management, the board, and all the auditors," says Savage. "As far as we can tell, the vast majority of the issues raised by the Inspector General's audit were the result of the thievery of a trusted bookkeeper."

However, the EPA's concerns did not end with the alleged embezzlement of one employee.

The Inspector General found that the Foundation had been awarding no-bid contracts on the subject of CAFOs, Concentrated Animal Feeding Operations. Specifically, the EPA grants to study ways to reduce water pollution around pig farming facilities were being handed to pork producers and pork lobbyists–- including $50,000 to a firm run by one of Cannon's fellow board members.

Factory hog farms have been under a microscope ever since 1995, when an eastern North Carolina farm's eight-acre waste lagoon collapsed and spewed 25 million gallons of liquid pig manure into fields and waterways, killing thousands of fish.

As the ranking member on the Senate Environment and Public Works Committee, Sen. James Inhofe (R-OK) is often at odds with President Obama on green issues, yet even he says he would have given Cannon the green light.PHOTO COURTESY OF THE OFFICE OF SENATOR INHOFE

The fellow board member whose firm got a taxpayer-funded EPA grant (in apparent violation of federal conflict of interest regulations) is Charles Grizzle, a Washington-based lobbyist who stresses his "strong Republican credentials" on his website and who has worked on behalf of the pork production industry.

Today, Grizzle says that he feels especially sorry about Cannon's withdrawal, since neither he nor Cannon were ever paid for their service on the board, and he says he was the one who convinced Cannon to join the Foundation's board.

Although Grizzle defends his business with the Foundation as "perfectly legitimate" and claims that he "would always leave the room anytime they were discussing doing business with my company," Grizzle would do things differently today.

"In hindsight, I would absolutely not seek those contracts because of the appearance of conflict of interest," says Grizzle. "With what's happened to Jon, I wouldn't do it again."

Grizzle says he hasn't spoken with Cannon. "I've thought about calling him," says Grizzle, "but I just haven't been able to do it."

With the commencement of the audit, the EPA pulled its grants, and the Foundation, whose income was almost exclusively derived from the grants, folded in 2005. For instance, the Foundation's 2004 tax filing–- its last full fiscal year–- reveals that over 98 percent of Foundation income, $4.03 million, came directly from EPA grants.

And that upsets UVA urban and environmental planning professor Rich Collins, who thinks the real problem with the Foundation has less to do with alleged financial mismanagement than what exposing the inner workings of the pork industry could have meant for the Obama Administration.

Collins notes that the Foundation contractor handed most of that federal money–- in zero-competition bids, no less–- was something called Validus LLC, which the Inspector General's report notes was a wholly owned subsidiary of the National Pork Producers Council, a lobbying group. Validus took in over $21 million in taxpayer funds via the Foundation–- including $25,000 a month for one piece of software.

"Why you would have the pork producers inspecting themselves when it comes to the environment," says Collins, "is something I don't understand."

The Inspector General noted that federal regulations demand that any contract over $100,000 deserves competition or at least a cost analysis, neither of which allegedly happened.

"A wolf guarding the henhouse," Collins blasts the arrangement.

"What the EPA inspector general failed to take into account," counters Grizzle, "is that the reason this was a sole-source contract was that they were the only ones capable of doing the work."

"Mr. Grizzle is correct," adds Savage. "There were no other contractors doing on-farm environmental assessments, which was the work envisioned in the project."

When reached for comment, a spokesperson for the EPA Inspector General's office said that the audit is closed, and that the office "stands by our work and has no further comment."

Cannon's chances for a smooth confirmation may have still been likely, particularly after the top Republican on the Senate Environment and Public Works Committee, Senator James Inhofe of Oklahoma, stated his public support for Cannon in late March. According to UVA professor and political pundit Larry Sabato, Cannon would have been "almost certain" of an easy confirmation.

"Jim Inhofe is known as one of the three or four most conservative Republicans in the Senate," explains Sabato. "He has not hesitated to criticize and even target certain Democratic nominees. When Jim Inhofe gives his support to a Democratic nominee, that nominee will not have any trouble getting confirmed."

Still, from where Law Dean Jeffries sat, the political pressure wasn't coming from the administration's right flank.

"There's an odd little political story here," says Jeffries. "The Republicans said that this was no problem, but I've heard no such statement from any of the Democrats."

Indeed, committee chair Senator Barbara Boxer (D-CA) never made a public statement on Cannon's nomination. The Hook inquired with Sen. Boxer's press office about her position on Cannon and the EPA audit, but heard no response at press time.

Still, according to Mike Allen, chief White House correspondent for the political insider publication Politico, it's possible that to allay the Obama administration's concerns about bad publicity Cannon withdrew.

"Sometimes, they figure it out on their own; other times, they get a tap on the shoulder," says Allen.

"Either way," Allen continues, "lots of would-be Obama dream-teamers have wound up without Administration jobs if they had issues–- legitimate or not–- that might conflict with the president's squeaky-clean approach to hiring."

While Cannon is hardly the first of Obama's nominees to be felled by the potential for scandal, he does appear to be the first whose problem has been guilt by association. Most of the president's highest-profile withdrawals have come from their own actions or inactions.

Former Senator and Health and Human Services nominee Tom Daschle withdrew after realizing he had neglected to pay $140,000 in taxes on income he had omitted on his tax returns; New Mexico governor and Commerce nominee Bill Richardson stepped aside amid a federal probe into possible "pay-to-play" contracts in the New Mexico state government.

Still, pundit Sabato says it could be that confirmation hurdles weren't what drove Cannon's decision to bail.

"It may be," says Sabato, "that he was concerned about his name being on the blogs, in the newspapers, and on the Sunday talk shows, and before you know it, he's become a political symbol. Even if you've done nothing wrong, that could hurt your future political career."

Regardless of the rationale, Cannon's fellow UVA Law prof Richard Merrill says that based on his conversations with the would-be Administration official, the retreat was driven entirely by Cannon.

"He told me," says Merrill, "that he had been the one to make the decision not to pursue the appointment."

While the extent of the internal turmoil at America's Clean Water Foundation may never be fully known, what is known is that two years after the EPA completed its audit, what began as a simple case of embezzlement by a book-keeper has torpedoed the career advancement of two prominent Central Virginians.

Not only did Cannon have to pass up the prestigious EPA post, Savage had to leave her job at the Association of State and Interstate Water Pollution Control Administrators, losing that six-figure salary, along with her six-figure salary from the Foundation.

"With the extended review," explains Savage, "funds were not available to the entire staff, and I left because I needed to focus my attention on closing down the Foundation."

The EPA's loss will be the UVA law school's gain. Cannon is back in his faculty office and will begin teaching again in the fall.
COURTESY OF THE UVA SCHOOL OF LAW

It would appear, though, that both Charlottesville-area residents have landed on their feet.

Despite the fact that Cannon had leased an apartment in Washington and that UVA Law had already hired his replacement for the spring semester, Cannon has returned to the UVA Law School and will begin teaching again with the start of the fall semester in August.

Savage currently resides in Stanardsville, where the Foundation records are kept, and she continues her interest in water issues by serving as the director of a river protection group, the Rivanna Conservation Society.

Cannon declined to comment on the specifics of his decision to withdraw.

"I appreciate your interest in this," Cannon told the Hook, "but I said what I wanted to say in the statement I released, and I want to leave it at that."

Having worked alongside Cannon for more than a decade, Merrill says he's disappointed that this once-promising development in his colleague's career has ended this way.

"I'm frustrated for him," says Merrill. "He would have been splendid."

What's more, Jeffries says the worst part is not Cannon's lost opportunity, but what his leadership would have meant for the American people.

"That the country will not have the benefit of his talents and his integrity," says Jeffries, "is a tragedy."

12 comments

dan April 13th, 2009 | 7:18pm

Sounds like someone dropped the ball --congratulations to the Hook This is a national story that the nation is just now hearing about.
"While the extent of the internal turmoil at America’s Clean Water Foundation may never be fully known" --time for a Freedom of Information Request I'd say--where are those records ? Just like the Madoff scandal, I don't believe the blame for what the EPA found was the work of the office manager alone. "According to the EPA inspector general’s 2007 final audit report, the Foundation’s internal controls and financial records were a mess."

Must have been a lot of pork in this pig for Cannon to withdraw. Tune in for the rest of the story --

Dave April 13th, 2009 | 9:17pm

Disband the EPA. It was conceived by Nixon and has ran its course. State DEQ agencies are adequate to address environmental concerns. In order to help preserve the environment, the EPA can immediately disconnect utilities to its offices.

dan April 13th, 2009 | 9:37pm

Doesn't sound like the EPA was the problem in this affair --appears that the Clean Water Foundation and the pig connection hold responsibility for the disappearance of funds --

Buffalo girl April 14th, 2009 | 7:54am

EPA auditors accused the Foundation in 2007 of mismanaging $25 million in taxpayer funds.

David, I would agree that the EPA should be more diligent about who they are giving our money to. A law professor told me that "Nonprofits have for a long time been an area where there is loose management and loose oversight."

Rich Collins April 14th, 2009 | 8:42am

I think Larry Sabato is right: there was no indication that John couldn't be confirmed. The issue arose somewhere in the vetting process with the Obama administration. If there was opposition to John's appointment (and I don't know this)it likely came from environmentalists.

Rich

Dan April 14th, 2009 | 8:21pm

Agast, the office manager embezzeled $300,000 what happened to the other $25 million that was "mismanaged" don't think you can pin that on her --if you read the 2007 audit and Inhofe's statement. So curious that Inhofe the EPA watchdog would say the following in his statement:

"Ã¢â?¬Å?At a recent staff meeting, as part of the normal oversight process for nominees, Inhofe committee staff questioned Mr. Cannon regarding an EPA Inspector General report on America’s Clean Water Foundation, on which Mr. Cannon served as a board member. According to the report, the organization mismanaged $25 million in taxpayer-funded grants. Through his leadership position on the EPW Committee, Senator Inhofe has long made EPA grant oversight a priority.

Ã¢â?¬Å?I want to make clear, however, that at the meeting Inhofe staff expressed to Mr. Cannon that, though the organization committed serious missteps in managing federal grants, it did not warrant opposition to his nomination.”

his support doesn't make any sense --am I missing something ?

Mark April 15th, 2009 | 6:07am

"the president’s squeaky-clean approach to hiring"?

Huh? A tax cheat runs the IRS, and numerous other nominees- some withdrawn, some confirmed like Geithner- have also failed to be patriotic and pay their taxes.

So which squeaky-clean Obama nominees actually paid too much in taxes, I wonder? Cannon looks like an ethical giant next to the clowns that have already gotten through the door.

Citizen April 16th, 2009 | 7:07pm

I heard Cannon was very well liked by EPA staff who considered his nomination a done deal and were devastated and mystified by his withdrawal.

Agast spectator April 14th, 2009 | 5:37pm

This looks like a large bureaucracy (EPA) looking for a scapegoat to distract from its own improprieties. All evidence indicates this office manager had everyone fooled. Savage came forward as soon as her people discovered the theft, not an act of someone Ã¢â?¬Å?in on it.” By all reports, Cannon was the best candidate and this looks much like the nonsense Clinton Ã¢â?¬â??era republicans pulled to make the other side look bad (or plain childish pouting, you decide).

Citizen April 15th, 2009 | 6:55am

A citizen group has published a pig book against tax payer waste
maybe someone should investigate this $25 million dollar pig

Even if Cannon is squeaky-clean how did the $25 million get mismanaged and who was responsible?

Today is tax day isn't that what we should care about ?

Observer April 15th, 2009 | 8:29am

Cannon is an accomplished lawyer. As a BOD member he has oversight responsibilities. Why is he not leading the effort to investigate and explain this situation? And has Roberta Savage just walked away. That is unacceptable!!!!!!!!!!!!!!!

[still] Smells Fishy April 18th, 2009 | 3:10pm

an industry astroturf lobbying front are "the only ones capable of doing the work.”??

talk about some serious hogwash! that statement seems like an awful big. stretch

and I very much doubt it was enviros who torpedoed this nomination. that has internal politics written all over it, or Ag interests not wanting this charade exposed.

also, this had very little to do with EPA beyond lax oversight, but it was Bush's EPA at the time, so lax oversight was probably pretty common at EPA. it was a pretty clear case of an industry writing its own rules, setting up an astroturf organization to "enforce" those rules and using a non-profit organization to launder the money to pay the astroturf organization.